Certain Helical Spring Lock Washers from the People's Republic of China; Preliminary Results of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of Preliminary Results of Antidumping Duty Administrative Review.

SUMMARY:

In response to a request by Shakeproof Assembly Components Division of Illinois Tool Works, Inc. (Shakeproof), a domestic interested party, the Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on certain helical spring lock washers from the People's Republic of China. The period of review (POR) is October 1, 2002, through September 30, 2003. We preliminarily find that the cash deposit rate for this review is de minimis. Upon completion of this review, the Department will instruct CBP to assess antidumping duties on all appropriate entries of subject merchandise that was exported by Hangzhou Spring Washer Co., Ltd. (also known as Zhejiang Wanxin Group, Ltd.) (collectively, Hangzhou), and entered during the POR. Interested parties are invited to comment on these preliminary results.

EFFECTIVE DATE:

November 9, 2004.

FOR FURTHER INFORMATION CONTACT:

Marin Weaver, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone (202) 482-2336.

SUPPLEMENTARY INFORMATION:

Background

On October 19, 1993, the Department published the antidumping duty order on certain helical spring lock washers (HSLWs) from the People's Republic of China (PRC) (58 FR 53914), as amended on November 23, 1993 (58 FR 61859). On October 1, 2003, the Department published a notice of opportunity to request an administrative review of this order (68 FR 56618). On October 20, 2003, in accordance with 19 CFR 351.213(b)(1), Shakeproof requested that the Department conduct an administrative review of Hangzhou, a producer/exporter of HSLWs from the PRC.

The Department published a notice of initiation of this administrative review on November 28, 2003 (68 FR 66799). On June 25, 2004, the Department extended the due date for the preliminary results of this review to November 1, 2004. See Certain Helical Spring Lock Washers from the People's Republic of China: Notice of Extension of Time Limit of Preliminary Results of Antidumping Administrative Review, 69 FR 35583 (June 25, 2004). Hangzhou submitted timely responses to all of the Department's requests for information in this review.

Scope of the Order

The products covered by the order are HSLWs of carbon steel, of carbon alloy steel, or of stainless steel, heat-treated or non-heat-treated, plated or non-plated, with ends that are off-line. HSLWs are designed to: (1) function as a spring to compensate for developed looseness between the component parts of a fastened assembly; (2) distribute the load over a larger area for screws or bolts; and (3) provide a hardened bearing surface. The scope does not include internal or external tooth washers, nor does it include spring lock washers made of other metals, such as copper.

HSLWs subject to the order are currently classifiable under subheading 7318.21.0030 of the Harmonized Tariff Schedule of the United States (HTSUS). Although the HTSUS subheading is provided for convenience and customs purposes, the written description of the scope of this proceeding is dispositive.

Separate Rates Determination

The Department has treated the PRC as a non-market-economy (NME) country in all past antidumping duty investigations and administrative reviews. See, e.g., Final Determination of Sales at Less Than Fair Value: Tetrahydrofurfuryl Alcohol From the People's Republic of China, 69 FR 34130 (June 18, 2004). A designation as an NME country remains in effect until it is revoked by the Department. See section 771(18)(C)(i) of the Tariff Act of 1930, as amended (the Act).

It is the Department's standard policy to assign all exporters of subject merchandise subject to review in a NME country a single rate unless an exporter can demonstrate an absence of government control, both in law and in fact, with respect to exports. To establish whether an exporter is sufficiently independent of government control to be entitled to a separate rate, the Department analyzes the exporter in light of the criteria established in the Final Determination of Sales at Less Than Fair Value: Sparklers from the People's Republic of China, 56 FR 20588 (May 6, 1991) (Sparklers), as amplified in Final Determination of Sales at Less Than Fair Value: Silicon Carbide from the People's Republic of China, 59 FR 22585 (May 2, 1994) (Silicon Carbide). Under this test, exporters in NME countries are entitled to separate, company-specific margins when they can demonstrate an absence of government control over exports, both in law (de jure) and in fact (de facto). Evidence supporting, though not requiring, a finding of de jure absence of government control over export activities includes: (1) an absence of restrictive stipulations associated with the individual exporter's business and export licenses; (2) any legislative enactments decentralizing control of companies; and (3) any other formal measures by the government decentralizing control of companies. De facto absence of government control over exports is based on four factors: (1) whether each exporter sets its own export prices independently of the government and without the approval of a government authority; (2) whether each exporter retains the proceeds from its sales and makes independent decisions regarding the disposition of profits or the financing of losses; (3) whether each exporter has the authority to negotiate and sign contracts and other agreements; and (4) whether each exporter has autonomy from the government regarding the selection of management. (See Silicon Carbide, 59 FR at 22587, and Sparklers, 56 FR at 20589.)

In May 1999 Hangzhou was sold at auction to five individuals and became a limited liability company. Hangzhou has placed on the record documents to demonstrate the absence of de jure control including its list of shareholders, business license, and the Company Law. Other than limiting Hangzhou to activities referenced in the business license, we found no restrictive stipulations associated with the license. In addition, in previous cases the Department has analyzed the Company Law and found that it establishes an absence of de jure control. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Certain Partial-Extension Steel Drawer Slides with Rollers from the People's Republic of China, 60 FR 54472, 54474 (October 24, 1995). We have no information in this segment of the proceeding which would cause us to reconsider this determination. Therefore, based on the foregoing, we have preliminarily found an absence of de jure control for Hangzhou.

With regards to de facto control, Hangzhou reported the following: (1) it sets prices to the United States through negotiations with customers and these prices are not subject to review by any government organization; (2) it does not coordinate with other exporters or producers to set the price or determine to which market companies sell subject merchandise; (3) the Chamber of Commerce does not coordinate the export activities of Hangzhou; (4) Hangzhou's general manager has the authority to contractually bind the company to sell subject merchandise; (5) the board of directors has appointed the general manager; (6) there is no restriction on its use of export revenues; (7) Hangzhou's management decides how to dispose of the profits and Hangzhou has never had a loss. Additionally, Hangzhou's questionnaire responses do not suggest that pricing is coordinated among exporters. Furthermore, our analysis of Hangzhou's questionnaire responses reveals no other information indicating governmental control of export activities. Therefore, based on the information provided, we preliminarily determine that there is an absence of de facto government control over Hangzhou's export functions.

In the instant administrative review, we find an absence of government control, both in law and in fact, with respect to Hangzhou's export activities according to the criteria identified in Sparklers and an absence of government control with respect to the additional criteria identified in Silicon Carbide. Therefore, we have assigned Hangzhou a separate rate.

Export Price

Because Hangzhou sold the subject merchandise to unaffiliated purchasers in the United States prior to importation into the United States (or to unaffiliated resellers outside the United States with knowledge that the merchandise was destined for the United States) and use of a constructed-export-price methodology is not otherwise indicated, we have used export price in accordance with section 772(a) of the Act.

We calculated export price based on the FOB price to unaffiliated purchasers. From this price, we deducted amounts for foreign inland freight and brokerage and handling pursuant to section 772(c)(2)(A) of the Act. We valued these deductions using surrogate values. We selected India as the primary surrogate country for the reasons explained in the “Normal Value” section of this notice.

Normal Value

Section 773(c)(1) of the Act provides that, in the case of an NME, the Department shall determine normal value (NV) using a factors-of-production methodology if the merchandise is exported from an NME and the information does not permit the calculation of NV using home-market prices, third-country prices, or constructed value under section 773(a) of the Act. Because information on the record does not permit the calculation of NV using home-market prices, third-country prices, or constructed value and no party has argued otherwise, we calculated NV based on factors of production in accordance with sections 773(c)(3) and (4) of the Act and 19 CFR 351.408(c).

Because we are using surrogate country factors-of-production prices to determine NV, section 773(c)(4) of the Act requires that the Department use values from a market-economy (surrogate) country that is at a level of economic development comparable to that of the PRC and is a significant producer of comparable merchandise. We have determined that India, Indonesia, Sri Lanka, the Philippines, Morocco, and Egypt are market-economy countries at a comparable level of economic development to that of the PRC. (For a further discussion of our surrogate selection, see the July 15, 2004, memorandum entitled Request for a List of Surrogate Countries which is available in the Department's Central Records Unit, room B099, of the main Commerce building (CRU)). In addition, we have found that India is a significant producer of comparable merchandise, i.e., fasteners. See Memorandum to File from Paul Stolz, dated November 1, 2004, which is on file in the CRU. As in the investigation and the nine previous reviews of this order, we have chosen India as the primary surrogate country. Thus, we have used Indian prices to value the factors of production.

We selected, where possible, publicly available values from India which were average non-export values, representative of a range of prices within the POR or most contemporaneous with the POR, product-specific, and tax-exclusive. Also, where we have relied upon import values, we have excluded imports from South Korea, Thailand, and Indonesia. The Department has found that these countries maintain broadly available, non-industry-specific export subsidies and that the existence of these subsidies provides sufficient reason to believe or suspect that export prices from these countries are distorted. See Final Determination of Sales at Less Than Fair Value: Certain Automotive Replacement Glass Windshields From the People's Republic of China, 67 FR 6482 (February 12, 2002), and accompanying Issues and Decision Memorandum. Our practice of excluding subsidized prices has been upheld in China National Machinery Import and Export Corporation v. United States and the Timken Company, 293 F. Supp. 2d 1334 (CIT 2003).

Steel Value

During the POR, Hangzhou imported a portion of its steel input (carbon steel wire rod (CSWR)) from market economies and paid for this input in a market-economy currency. In the 2001-2002 administrative review, we disregarded certain steel import prices reported by Hangzhou because there was “reason to believe or suspect” the steel benefitted from subsidies and have continued to do so in this review. For further discussion of this issue, see Memorandum to the File, Hang Zhou Spring Washer Plant, also known as Zhejiang Wanxin Group Co., Ltd., Calculation Memorandum at 4 (November 1, 2004). Pursuant to 19 CFR 351.408(c)(1) we have used Hangzhou's average purchase price for CSWR imported from a market-economy country during the POR to value CSWR in calculating Hangzhou's normal value.

Material Inputs

We calculated a surrogate value for steel scrap using the value of imports of steel scrap into India based on information from the Monthly Statistics of the Foreign Trade of India - Imports (MSFTI). In computing this value, we have taken into account that we have made final affirmative countervailing duty determinations on steel products from numerous countries. Therefore, we have not included values for imports of steel scrap into India from Belgium, Canada, France, Germany, and the United Kingdom (as well as South Korea, Thailand and Indonesia).

The remaining inputs are addressed below:

• To value hydrochloric acid used in the production of HSLWs, we used per-kilogram import values obtained from Chemical Weekly. We adjusted this value to account for freight costs incurred between the supplier and Hangzhou.
• To value all other the chemicals used in the production of HSLWs, we used per-kilogram import values obtained from the MSFTI. We also adjusted these values to account for freight costs incurred between the supplier and Hangzhou.
• To value plating, we used a March 14, 2003, price quote supplied by Shakeproof in the 2001-2002 administrative review. We adjusted the value to reflect inflation using the wholesale price index (WPI) published by the International Monetary Fund (IMF).
• To value coal, we used a per-kilogram value obtained from the MSFTI. We also made adjustments to account for freight costs incurred between the supplier and Hangzhou.
• To value electricity, we used the 1999/2000 electricity price data from the 2001-2002 Annual Report on the Working of State Electricity Boards and Electricity Departments published by the Planning Commission (Power and Energy Division) Government of India May, 2002. We adjusted the value to reflect inflation using the electricity sector-specific inflation index published in the Reserve Bank of India (RBI) Bulletin.
• To value water, we used the Second Water Utilities Data Book for the Asian and Pacific Region published by the Asian Development Bank in 1997. We adjusted the value to reflect inflation using the WPI published by the RBI.
• For labor, we used the regression-based wage rate for the PRC in “Expected Wages of Selected NME Countries,” located on the Internet at http://ia.ita.doc.gov/wages/index.html.
• For factory overhead, selling, general, and administrative expenses (SG&A), and profit values, we used information from the January 1997 RBI Bulletin report entitled “Combined Income, Value of Production, Expenditure and Appropriation Accounts, Industry Group-Wise, 1990 - 91 to 1992 - 93 (contd.).” From this information, we were able to determine factory overhead as a percentage of the total raw materials, labor and energy (ML&E) costs, SG&A as a percentage of ML&E plus overhead (i.e., cost of manufacture), and the profit rate as a percentage of the cost of manufacture plus SG&A.
• For packing materials, we used the per-kilogram values obtained from the MSFTI. Where necessary, we adjusted these values to reflect inflation using the WPI published by the RBI. We also made adjustments to account for freight costs incurred between the PRC supplier and Hangzhou.
• To value foreign brokerage and handling, we used information reported in the Final Determination of Sales at Less Than Fair Value; Certain Hot-Rolled Carbon Steel Flat Products from India, 67 FR 50406 (October 3, 2001). We adjusted this value to reflect inflation using the WPI published by the RBI.
• To value truck freight, we used the freight rates published in the Great Indian Bazaar at http://www.infobanc.com/logtruck.htm. We obtained distances between cities from the following website: http://www.mapsofindia.com. We deflated this value using the WPI published by the RBI.

For a complete description of the factor values we used, see “Memorandum to File: Factor Values Used for the Preliminary Results of the 2002-2003 Administrative Review,” dated November 1, 2004 (Factors Memorandum), a public version of which is available in the Public File of the CRU.

Preliminary Results of Review

We preliminarily determine that the following dumping margin exists:

We will disclose the calculations used in our analysis to parties to this proceeding within five days of the publication date of this notice. See 19 CFR 351.224(b). Interested parties are invited to comment on the preliminary results. Interested parties may submit case briefs within 30 days of the date of publication of this notice. Rebuttal briefs, limited to issues raised in the case briefs, may be filed no later than 37 days after the date of publication of this notice. Parties who submit arguments are requested to submit with each argument a statement of the issue, a brief summary of the argument, and a table of authorities.

Further, we would appreciate it if parties submitting written comments would provide an additional copy of the public version of any such comments on a diskette. Any interested party may request a hearing within 30 days of publication of this notice. See 19 CFR 351.310(c). If requested, a hearing will be held 44 days after the publication of this notice or the first workday thereafter. The Department will publish a notice of the final results of this administrative review, which will include the results of its analysis of issues raised in any written comments or hearing, within 120 days from publication of this notice.

Assessment

Pursuant to 19 CFR 351.212(b), the Department calculated an assessment rate for each importer of subject merchandise. Upon completion of this review, the Department will instruct CBP to assess antidumping duties on all appropriate entries of subject merchandise. We have calculated each importer's duty-assessment rate based on the ratio of the total amount of antidumping duties calculated for the examined sales to the total quantity of sales examined. Where the assessment rate is above de minimis, the importer-specific rate will be assessed uniformly on all entries made during the POR.

Cash Deposit Requirements

The following cash deposit rates will be effective upon publication of the final results for all shipments of HSLWs from the PRC entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided for by section 751(a)(1) of the Act: (1) for Hangzhou, which has a separate rate, the cash deposit rate will be the company-specific rate established in the final results of review; (2) for all other PRC exporters, the cash deposit rate will be the PRC rate, 128.63 percent, which is the “All Other PRC Manufacturers, Producers and Exporters” rate from the Final Determination of Sales at Less Than Fair Value: Certain Helical Spring Lock Washers from the People's Republic of China, 58 FR 48833 (September 20, 1993); and (3) for non-PRC exporters of subject merchandise from the PRC, the cash deposit rate will be the rate applicable to the PRC supplier of that exporter. These deposit rates, when imposed, shall remain in effect until publication of the final results of the next administrative review.

This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.

This determination is issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act.